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DRB- Hicom & Volkswagen Pact Will Help Make Malaysia An Asean Auto Hub

By Tuesday December 21st, 2010 No Comments

KUALA LUMPUR, Dec 21 (Bernama) — The collaborative agreement between DRB-Hicom Bhd and Volkswagen AG with an investment of almost RM1 billion, will help Malaysia become an automotive hub in Asean, Prime Minister Datuk Seri Najib Tun Razak said here Tuesday.

He said the commitment by one of Europe’s best car manufacturers, VWAG, in this venture has the potential to transform the country into a VWAG manufacturing hub.

“The increasing entry rate of respected or reputable multinationals into the Malaysian market reflects the growing confidence foreign investors have in our economy and investor-friendly policies,” Najib, who is also Finance Minister, said.

Speaking at the ceremony where DRB-HICOM signed an exclusive collaboration and licence agreement with VWAG and Volkswagen Group Malaysia Sdn Bhd (VGM), Najib said the government provided a range of customised incentives, including tax relief under the National Automotive Policy.

He said VWAG’s entry with advanced car technology and expertise would add value along the automotive value chain.

Najib also called on local automotive players to stay relevant in the dynamic market by regularly reinventing themselves through innovation and adoption of new technologies.

“As we move forward, I must note that the tasks of developing the automotive industry is not the government’s alone. The private sector also has an important role to play in achieving our national vision for this industry.”

Najib said Malaysia was well positioned to serve as a regional hub because of its strategic location as well as its sea, road and air transportation.

This could turn it into a vibrant and self-sustaining automotive production centre of Asean, he said.

This in turn will promote job creations, skills development and business opportunities for downstream industries.

“It will also advance our local automotive technology and transfer technical expertise for the assembly, testing and quality assurance of CKD models,” he said.

This collaboration would support the national localisation goal where DRB-HICOM and Volkswagen plan to localise certain components and expect to achieve about 40 per cent local content, he said.

Under the agreement, DRB-HICOM will assemble completely knocked down Volkswagen vehicles at its automotive complex in Pekan, Pahang for Malaysians and subsequently the Asean market.

It also includes the procurement of CKD assembling kits, manufacturing and supply of components and the assembly of vehicles.

Both parties are looking at starting production in the fourth quarter of 2011 with the assembly of the Passat models followed by Polo and Jetta, in accordance with VWAG’s specification.

The deal follows a Memorandum of Understanding signed by both parties in August this year, to study the feasibility of the local production of Volkswagen passenger cars in Malaysia.

Source : Bernama

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